Prices and Productivity in Agriculture

Lilyan E. Fulginiti, Richard K. Perrin
December 1992 [93-GATT 2]

Developing countries often tax agriculture heavily, a practice that might affect the productivity as well as the quantity of resources allocated to agriculture. A variable-coefficient cross-country agricultural production function is estimated, with past price expectations among the determinants of the production coefficients. Productivity's responsiveness to the expectations implies that, had these developing economies eliminated price interventions, agricultural productivity would have increased by and average of 25 percent.